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ESSAY

1. The Basic Concept of MFCA in relation to the environmental accounting

MFCA exists because of a need in controlling the flow and stock of materials both physically and monetary of the company. MFCA is present
to improve the efficiency of material use in manufacturing companies, in order to minimize energy and costs used to reduce the waste material
remaining. MFCA includes three concepts, there is: first material cost, is the physical amount of material used in the production process such as the
purchase price, second system cost, is a system that handles reduce labor costs and maintenance costs in the company, and then third is waste costs,
is costs incurred by the company because of the remaining of positive and negative goods form waste water, energy, and emissions as a result of the
production process.

In this case material is the main focus in applying MFCA, then the cost system is tasked with regulating and tracking all material inputs and
outputs in the production process so later the company can know the costs shouldn’t spent in production process, regarding raw material inputs are
converted into products, and losses are generated through monetary calculations.

MFCA has a relationship with environmental accounting in terms of calculation and decision making regarding residual production materials
can damage the environment. So we conclude that the aims of MFCA is to save production costs and reduce residual waste from production which
has a negative impact on the environment simultaneously.

2. The steeps to be developed to implement MFCA in one industry


One of the industry that we take as example is CV. PIKEYRO as manufacture company of mineral water. The remaining product of this
company is splinter of plastic bottles. There are some stages that CV. Pikeyro can implemented using MFCA method. The first step, the company's
top management must determine the roles and responsibilities and determine the appropriate steps regarding the MFCA calculation and analysis
process.This is important that need to be considered in the MFCA implementation process include : First, the attention and tracing of material input
flows and the use of energy in the entire production process. Second, we company must controls related to product quality which is include frequency
problems of waste, maintenance and other quality assurance, third Accuracy regarding the analysis and calculation of cost accounting for
environmental impacts caused by waste. The second step is the preparation process for implementing the analysis of the target material that will be
used in the production process so that the material used is efficient. The third step, classifying costs into several categories: First, Material costs
(costs for material entering or leaving) second, Energy costs (costs for electricity, steam, heat, and compressed air) third, System costs (labor costs,
depreciation , maintenance and transportation costs) forth, Waste management costs (handling costs generated at the quantity center). The fourth
step, the company has to identifies material losses and reduced costs due to the production process. Finally the company has to make improvements
and evaluations related to the impact of using the MFCA method on the company.
3. The MFCA concept for the future of creating sustainable business
There are new legislation on waste management and increased competition in the industry, the company needs to make strategic decision to
ensure the future sustainability of the organization. To ensure their future sustainability and competitiveness,management needs to consider adopting
Cleaner Production (CP) with MFCA techniques and technologies which will address waste issues at its source. According to the CP philosophy,
which focuses on resources and resource flows, any reduction in material and energy used will result in fewer emission. CP is perceived by
management as a costly strategy that requires innovation with no financial returns to the company in the short-term. They are unaware of how high
their environmental costs are, since the company uses conventional accounting methods to allocate costs.
The MFCA concept can help the sustainability of business in the future because MFCA is able to increase industrial productivity through the
emphasis in efficiency in calculating waste (wasted things or waste) and being able to reduce the value of company costs and improve energy
efficiency used.
CASES

1. MFCA FLOW MODEL


2. Verify Mass Balance for Each The Quantity Center
3. QC1 QC2 QC3 QC4
Plastic resin 100kg machine oil plastic part 68 pocked WIP 68
mixed
Pigment 10kg material 109kg shirnkwrap label
Mixing 110kg injection 69kg carton Inspection 68
resin &pigment
bag 1kg set up reject 20kg pallet rejected part
mixed material 109kg runner 15kg packing 68 QC sample
reject
injection 5kg shirkwrap Finish good 65
waste oil packed WIP 68
plastic part 68kg

Balance YES NO YES NO

QC1: Balance, because the material before and after mixing process have same total quantity with mixed material, resin, and pigment bag. But actually if
we calculate form cost accounting the defferences is 1 kg from mixed material, we analyze that differences from resin and pigment bag, because the
company use the resin and pigment bag not pipe resin and pigment.

For the furher action: the company must be make an agreement with the supplier use the pipe resin and pigment, so the material not clot in resin and pigment
bag .
QC2: Not balance, because the mixed material before and after injection process don’t have same total quantity, regarding from the data mixed material
before injection process is 109kg, but after injection process the output is 69kg through some process to be plastic part. Because of that process the total
of plastic part become 68kg. we analyze that the material waste in set up reject, reject injection, and runner.

For the furher action, we can recycle that material fromset up reject ,and set up project.

QC3: Balance, because the plastic part before and after packing process have same total quantity with packed work in process, and during the packing
process there is no value added for that material.

QC4: Not balance, the result of the inspection 68 but the finished goods is 65. We analyze that pocked WIP wasted in reject part and QC sample .

For the furher action, recycle that rejected product and QC sample after that sample is not used again.
4. Cost Calculation Model
Recommendation based on fundings from completed cost calculation model

Mixing Injection Packing Inspection


Weight,kg (%) Material ($) Energy ($) System ($) Disposal ($) Total Weight,kg (%) Material ($) Energy ($) System ($) Disposal ($) Total Weight,kg (%) Material ($) Energy ($) System ($) Disposal ($)Total Weight,kg (%) Material ($) Energy ($) System ($) Disposal ($) Total
New input in 110 1300 1000 1000 - 3300 New input in 109 1090 1000 1000 400 3490 New input in New input in
QC QC QC QC
68 680 1000 1000 - 2680 68 680 1000 1000 30 2710
Input from Input from Input from Input from
previous QC previous QC previous QC previous QC
Product :
Product : Product : Product :
Material 110 1300 1000 1000 - 3300 69 690 250 0 400 1340 68 680 1000 1000 - 2680 65
Product Product Product
Pigment 650 250 0 30 930

Losses : Set 20 200 Losses :


1 10
Losses - - - - - - up Runner 15 150 750 1000 - 2150 Losses - - - - - - Sample
2 20
Rejected 5 50 Rejected
750 1000 - 1780

Total in each Total in each Total in each Total in each


110 1300 1000 1000 - 3300 109 1090 1000 1000 400 3490 68 680 1000 1000 - 2680 68 680 1000 1000 30 2710
QC QC QC QC

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